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New Laws To Allow Foreign Ownership Of Property In DIFC

by Lorys Charalambous, Tax-News.com, Cyprus

16 August 2006


The Dubai International Financial Centre Authority (DIFCA) has published draft legislation that will allow foreign freehold ownership of property in the DIFC.

The laws published last week include the DIFC Real Property Law 2006 and the Strata Title Law 2006. The Real Property Law guarantees ownership of freehold land and interest in land within the DIFC. It will allow for foreign companies and individuals to hold freehold ownership of real estate within the Dubai International Financial Centre.

The Law is based on the underlying principles of English common law, but also incorporates the Torrens system of land registration, well known in countries such as Australia, New Zealand, Canada and Singapore. Under the system, land transactions are registered in a central register. Once registered, the law certifies them to be fully effective. This is the key distinguishing feature of the Real Property Law - unlike some other systems of land registration, interests registered under the Real Property Law are “indefeasible”. In practical terms, this means that persons buying real estate, lending on the security of real estate, or taking a lease on real estate, can be assured that their investment is backed by the full protection of the Law.

The Strata Title Law establishes a system of guaranteed freehold title to units in buildings in the DIFC. It is based on the system originally developed in Australia, which is now in use in many countries around the world, including Singapore.

The Law combines the benefits of guaranteed title under the Real Property Law with an administrative structure designed to handle the day-to-day management of buildings. It will help overcome the complexities of co-owners association constitutions, master community declarations, and the like, introducing a simple but comprehensive system of rights and responsibilities.

The DIFCA has opened a consultation on the laws, which will apply exclusively in the jurisdiction of the DIFC, to fulfil assurances made to developers, investors and clients, concerning real property rights within the DIFC, as well as implementing an internationally proven legal system.

The consultation closes on September 6, 2006. Once it has been completed, and when all relevant comments have been incorporated in the new laws, they will be sent for enactment by the Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid Al Maktoum.


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